Chinese electric vehicle (EV) manufacturer Nio Inc. aims to enhance efficiency and tighten cost control as it pushes to accelerate growth that is two years behind schedule, CEO William Li announced on Thursday.
Speaking at an event in Shanghai, Li outlined the company’s plans to stimulate sales. These include starting production at a third factory in the second half of 2024 and targeting monthly deliveries of 20,000 cars from its Onvo sub-brand by March 2025.
Sales Shortfalls and Strategic Shifts
Despite achieving 30-40% growth over the last three years, Li admitted this was below expectations. Nio, one of China’s top EV makers by sales, has pledged to double deliveries by 2025.
The company faces fierce competition in China’s EV market, where price wars have eroded profitability. In response, Nio has broadened its customer base and introduced cheaper models. The company has also streamlined its workforce and deferred non-essential projects, prioritising those that contribute directly to its financial performance within three years.
In May, Nio launched its affordable Onvo brand, debuting with the Onvo L60 SUV priced from 219,900 yuan (USD 30,300) — a clear bid to compete with Tesla’s Model Y, which starts at 249,900 yuan in China.
Supply Chain Challenges
Li also addressed the impact of recent U.S. semiconductor export restrictions, a critical issue for China’s auto industry. While domestic alternatives exist for high-powered car chips, replacing the thousands of inexpensive, foreign-sourced chips remains a significant hurdle. These components, priced at USD 1 to USD 2 each, are challenging to source domestically at scale, Li explained.
Outlook and Expansion Plans
Nio’s drive for cost controls and operational efficiencies reflects a broader industry trend as automakers balance ambitious growth targets with rising competition and geopolitical pressures.
As the company eyes its next phase of expansion, including the launch of its third factory and bolstered Onvo sales, its ability to navigate China’s crowded EV market and maintain profitability will be closely watched.